Jesse Eisinger on why the ultra-wealthy barely pay any tax at all
How do ultra-wealthy people avoid paying taxes? It seems like a strange subject to bring up when discussing why some evangelicals are drawn to the Republican Party. But many of the ties between evangelicals and the GOP have to do with money. So, let’s take a little side trip and explore the tax loopholes of today. More importantly, let’s try to understand why so many Americans are tax-averse. Could it possibly be because we, deep down, know that someone else is getting a better deal than us?
Buy, Borrow, Die
One tactic used by the ultra-wealthy is “buy, borrow, die”. They avoid “income”, instead opting for assets like stock and real estate they can borrow against. Borrowed money is not taxed. Then they either pay back those loans with other loans (often with interest rates that are much lower than their tax rates would be) or they fail to pay back the loans. Then… they die.
Jesse Eisinger is a Pulitzer Prize-winning reporter with Pro Publica. Chris first heard about him from his book (pardon the language) The Chickenshit Club and met him when he appeared at a live event in Jackson, WY hosted by the Teton County Library, the Center for the Arts, and the Jackson Hole News and Guide.
Sources
- Pro-Publica’s reporting on taxation
- This lecture at the Center for the Arts in Jackson, WY on November 8, 2023
- Fascinating IRS responses to some of the conspiracy theories about them
- Disney’s Donald Duck film “The New Spirit” encourages income tax as a national duty
- Time Magazine article about the history of taxes
- William McKinley vs. William Jennings Bryan by John Pafford (pg 29)
- New York Times archival article listing taxes paid by the wealthy
- The 16th Amendment
- The Macomber case article on Justia.com
- Historic Tax Bracket data
- Time Magazine article on the John Birch Society
- Methodist History from January 1988
Discussion Questions:
- What are your thoughts on the income tax in general?
- How should countries be funded?
- Why might a progressive tax structure (where wealthy people pay more) make sense?
- How could we close some of these tax loopholes?
- What is the difference between income and wealth?
- Should we tax wealth in the USA?
Just listened to the episode on this! I might agree that some attention could be given to some of the so-called “loopholes” in our tax codes. However, I do think the larger issue (and maybe I’m one of the conservatives that is part of this larger movement you are addressing) is that our government does not have a tax revenue problem; it has a spending problem. Focus on this lack of fairness involving a small number of the ultra-wealthy is missing the larger problem.
You might try talking to some other economists with different perspectives on taxes on the wealthy. Antony Davies is someone I like – https://youtu.be/FC5Gkox-1QY.
My one encouragement would be to stay on-topic on these comments sections.
We will continue to address the conservative aversion to taxes as the season continues. A bunch of the upcoming episodes are about economics. But before we do that it was vital to establish that the ultra-wealthy do not pay much in taxes, or, in many cases, anything. It is important to establish that because much of what bonded some evangelicals to the GOP has to do with taxes, and much of the lobbying came from very wealthy people who are already dodging taxes in ways that are not available to the rest of us. We’re playing checkers in 2D, they are playing chess in 3D.
To play Devil’s Advocate, one could argue that the reason your taxes are high is because the ultra-wealthy pay none. I’d encourage you to sit with that rather than to counter with concerns about spending. This is not an attack, it’s an admission that the game is different for different people, and that is fundamentally undemocratic.
Looking forward to hearing your perspective on economics and I can guess that taxes have a large role to play in evangelicals (and others) bonding with the GOP. I hope my comments are somewhat on topic. I’m sure you’ve looked into many perspectives on this already; I’m mostly just practicing my thinking.
To say that the “ultra-wealthy do not pay much in taxes” might be a bit disingenuous. While they may not pay much income taxes they certainly pay more in property, consumption, and, indirectly, corporate taxes. Yes, they may be playing chess in 3D but the rules are created by our lawmakers (though I’m sure they influence those a bit too). So much about economics is incentives; when productivity and wealth creation is taxed/punished you will get less of it.
To play Devil’s Advocate to your advocate, one could argue that the reason that our taxes are high has much more to do with government expanding beyond its role as referee within the market and becoming more of a player in the game; a player that uses coercion to pick winners and losers.
My guess is that we could tax the ultra-wealthy 100% and it wouldn’t make much of a difference.
Certainly the GOP has been just as guilty about increasing spending and the burden on tax payers and evangelicals are likely becoming increasingly suspicious of this bond with politics.
But, again, I’m looking forward to your perspective. Keep up the great work!
This is why taxes are fascinating! It only looks like the ultra-wealthy make up their share in property taxes, etc. That is not the case. You may enjoy my episodes in season 4 about conservation easements. In that episode I document how people here in Jackson, Wyoming get around paying property tax. One of the most successful actors in the world pays less in property tax than one of my friends who is on a government program to help people who work here. To be clear, she pays more than him in real dollars, not by percentage, even though he owns 400 times the amount of land than her.
Vox actually produced a helpful video on how this breaks down: https://www.youtube.com/watch?v=kXCGbAv8YPw
I should re-state that we are speaking of the ultra-wealthy, not merely the wealthy.
Yes, the ways of the ultra-wealthy are legal. But they are hardly ethical or fair. And we citizens can’t make necessary changes to our tax code unless we know what the ultra-wealthy are doing. If the ultra-wealthy are not taxed like the rest of us, but they can use their money to influence politics in ways that we can’t, we are not living in a democratic republic, but an oligarchy. Like, say, Elon Musk using his money to bully congress.You can read about that here.
What does this have to do with evangelicals? Much of evangelicalism continues to be funded by the ultra-wealthy. Including getting us riled up when their 3D chess is exposed.